Eisenhower Communications is trying to estimate the first-year net operating cas

Question

Eisenhower Communications is trying to estimate the first-year net operating cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenues $5 million Operating costs (excluding depreciation) 3.5 million Depreciation 1 million Interest expense 1 million The company has a 40% tax rate, and its WACC is 11%. >>>>What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest cent.

Explanation / Answer

Oper cash flow = $5 million Sales (10) - oper costs (7) + Depreciation (2) = $5 million note: interest and taxes are excluded from oper cash flows.

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